Operating profit ratio pdf

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Operating profit ratio pdf >> Download / Read Online Operating profit ratio pdf
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Step 1: Subtract the operating expenses from the revenue to get the company’s earnings before interest or tax (EBIT). As an example, take a company that has Rs.10000 in assets, Rs. 2,000 in liabilities, Rs. 5,000 in revenue and Rs. 3,000 in operating expenses. Subtracting operating expenses from revenue is Rs. 5,000 – Rs. 3,000 = Rs. 2,000.
Gross Profit USD 500,000 Operating Expenses (USD 200,000) The Operating Profit USD 300,000. Operating Margin or Ratio = 300,000 / 1,000,000 = 0.3 or 30% Analysis We could see how the ABC’s operational profit is USD 300,000, or the ratio is 30%. This figure is before interest and taxes and other income and expenses.
It is found by dividing operating income byrevenue, whereoperating incomeis revenue minus operating expenses.FORMULAOperating Margin RatioThe higher the ratio is, the more profitable the company is from its operations.EXAMPLEAn operating margin of 0.5 means that for every dollar the company takes in revenue, itearns $0.50 in profit.
The operating profit would be = (Gross profit – Labour expenses – General and Administration expenses) = ($270,000 – $43,000 – $57,000) = $170,000 Using the operating margin formula, we get – Operating Profit Margin formula = Operating Profit / Net Sales * 100 Or, Operating Margin = $170,000 / $510,000 * 100 = 1/3 * 100 = 33.33%. Colgate Example Operating profit is the net income derived from a company’s primary or core business operations. Operating profit is also (wrongfully) referred to as earnings before interest and tax (EBIT), as

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